At its meeting today, the Board decided to leave the cash rate unchanged at 2.75
per cent.

Information becoming available since the previous meeting is consistent with global
growth running a bit below average this year, with reasonable prospects of
a pick-up next year. Commodity prices have declined from their peaks but,
overall, remain at high levels by historical standards. Inflation has generally
moderated over recent months and monetary policy has been eased further in
a number of countries.

In Australia, growth over the past year has been a bit below trend. The outlook published
by the Bank last month is for a similar performance in the near term and
recent data are consistent with this. The unemployment rate has edged higher
over the past year and growth in labour costs has moderated. Inflation has
been consistent with the medium-term target and is expected to remain so
over the next one to two years.

The easing in monetary policy over the past 18 months has supported interest-sensitive
areas of spending and has been reflected in portfolio shifts by savers and
higher asset values. Further effects can be expected over time. The pace
of borrowing has thus far remained relatively subdued, though recently there
have been some signs of increased demand for finance by households. The exchange
rate has depreciated since the previous Board meeting, although, as the Board
has noted for some time, it remains high considering the decline in export
prices that has taken place over the past year and a half.

At today's meeting the Board judged that the easier financial conditions now
in place will contribute to a strengthening of growth over time, consistent
with achieving the inflation target. It decided that the stance of monetary
policy remained appropriate for the time being. The Board also judged that
the inflation outlook, as currently assessed, may provide some scope for
further easing, should that be required to support demand.